UPDATE 2-Comcast NBC deal held up by various issues-sources

Thu Oct 29, 2009 5:07pm EDT

* Deal for NBC Universal taking longer than expected

* Hurdles include governance, GE exit provisions

* Vivendi's demands also slowing process

* Sources say an agreement will likely be reached (Adds detail on talks, Vivendi stake, bylines)

By Anupreeta Das and Jui Chakravorty Das

NEW YORK, Oct 29 (Reuters) - Comcast Corp (CMCSA.O) and General Electric Co (GE.N) are struggling to iron out a few critical issues that are holding up a joint venture deal for NBC Universal, people familiar with the matter said.

While an agreement will likely be reached to give Comcast a 51 percent stake in the NBC Universal venture, advisers are trying to draft governance and exit provisions for GE's 49 percent stake that would be palatable to both sides, one of the sources said.

Under the proposal, the venture would consist of NBC Universal and Comcast's collection of cable networks. Comcast would also contribute between $4 billion and $6 billion.

Differences in valuing the various assets -- Comcast's cable networks, Vivendi SA's (VIV.PA) stake in NBC Universal and the proposed new company itself -- could also delay the complex deal, this person said. Under terms being discussed, the joint venture is valued at around $30 billion.

Vivendi is in talks with GE and is determined to get the best value for its 20 percent stake in NBC Universal, the source said. Vivendi has veto power over a deal, even though GE owns 80 percent of NBC Universal.

"There is a whole series of things, both big and small," a second source said.

The sources spoke on condition of anonymity because details of the discussions have not been made public.

Comcast has long wanted to buy media assets to create a content powerhouse spanning broadcast TV, cable and film. Chief Executive Brian Roberts said last week he would look at all opportunities in content but declined to comment on specific deals. [ID:nN20464059]

Exit provisions are critical in joint ventures because they deal with when and how a partner can get out. In the case of GE, many of its shareholders have urged the conglomerate to offload NBC Universal, whose broadcast and cable networks, movie studio and theme parks are considered misfits among GE's mostly industrial operations.

The parties have discussed an option for GE to sell all or part of its stake in the new venture to Comcast within seven years. [nN12144546]

Comcast and NBC Universal declined to comment, and Vivendi was not immediately available.

VIVENDI'S INFLUENCE

Vivendi, which has to agree to sell its stake for the deal to happen, is slowing down the process with demands to secure the best possible return for itself, the first source said. It's not clear what Vivendi is asking for, but it could be sweeteners beyond the price of the stake, the source said.

Every year between mid-November and mid-December, Vivendi has to decide whether to exercise its "put" option to sell its NBC Universal stake.

This year, Vivendi is eager to dispose of its stake, which it acquired as part of a 2004 deal to create NBC Universal, and is negotiating the valuation with GE, the sources said.

But the French conglomerate is likely to wait to make the final decision until GE and Comcast have a deal in place, they added.

Even then, Vivendi could press for more. "Once a deal is done, it's quite possible Vivendi will send it back for renegotiation, so this could take a little while," the first source said.

General Electric also has plans for an initial public offering of NBCU on the table, should the proposed deal with Comcast fall through, other people familiar with the matter said.

GE and Comcast are currently conducting due diligence, the sources said, adding that these hurdles are not uncommon in complex deals. "It's still not a done deal. If it's going to happen it will be in next two to three weeks," said a third person familiar with talks. (Additional reporting by Yinka Adegoke; Editing by Steve Orlofsky)

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